ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

The Donald Trump Economy - Good or Bad?

Updated on February 24, 2019
My Esoteric profile image

My Esoteric spent 20+ years as a DoD Cost and Economic Analyst as well as a program manager of the Air Force Total Cost of Ownership MIS.

The short answer is yes, it was. Partly because of the tax law he signed but mainly because it was doing well, in a sustainable way, before he took office. The same is true for the fantastic unemployment numbers - most of the heavy lifting there was done during Obama's term.

But are the good times about ready to end?

Stock Market Rise and Fall

Since Donald Trump won the election, based mostly on his promise to cut corporate tax rates, the Dow Jones Index rose well above the trend set by President Obama.

The Dow Jones Index

Dow Jones Industrial Index During the Obama and Trump Presidencies
Dow Jones Industrial Index During the Obama and Trump Presidencies | Source

It continued to rise as the Republicans pushed to pass the corporate tax cut bill. It rose still further after they did and the corporate beneficiaries cashed in with huge stock buy-backs. The contribution from the middle class is negligible.

At the moment, largely due to Trump's tariff war, the market has retreated to the track that President Obama put the country on. That means the current Dow is in the same channel that was establish under Obama.

It is also interesting to note that the technical formation established over the last several months is very similar to that created just prior to the Great 2008 Recession. If the current market can't breach that lower light line, get ready for a crash as the chances are greatly increased.

Unemployment

Low unemployment has probably been the best thing Donald Trump can point to as a success during his first two years in office 1. But again, the course was set during the Obama presidency; Trump just improved upon it. In another hub, however, I point out there are some storm clouds gathering to slightly dim the light on those great results.

But, before that there will be the January 2019 unemployment report. Because of the Trump gov't shutdown 2, his run of great unemployment numbers IS going to come to a screeching halt. Some think there might even be a net loss of jobs. The question is, of course, once the shutdown ends, after the initial rehiring is over, will the unemployment numbers get back to where they were. My bet is on that they won't



1 It is important to note (in order to keep the record straight) is job growth under Donald Trump is not as good as what it was under President Obama.

2 I call it that because Trump had promised Sen. Mitch McConnell he would sign the short-term funding bill in December 2018 but then broke that promise, leading to where we are 30 days later.

GDP

Long-term economic growth has never been as good as Trump has exaggerated about. Granted, it is better than that established by President Obama after the recovery was in progress.

Obama vs Trump GDP Results

Source

Another reason for recent improvement in GDP is the large increase in defense spending with little decrease else where. Since government spending is part of the GDP calculation, that will naturally increase GDP, everything else being equal.

What has had such a negative impact, however, on the Dow averages is predicted to have the same impact on GDP. In the short-run, the White House says the Trump shutdown is knocking 0.8% off of GDP growth per week of shutdown. To date, that means the GDP will have lost 3.2 points which, economists are saying, is close to putting the GDP in negative growth territory!!!

Long-term, however, a more devastating impact on growth is the Trump tariff wars. Beyond the effect of the shutdown, the war is reducing corporate profits across the board on on any company that deals in international trade.

Put the two together and negative growth for the 1st quarter 2019 is almost a certainty - and we are less than a month into it. In all likelihood, the trade war will keep economic growth low in the foreseeable future.

Debt and Deficit

It is arguable that the corporate tax cut will have any lasting impact on the stock market or GDP growth, but it is not arguable that it is going to balloon our deficit and are public debt. Already the public debt has increased $2 trillion dollars.

Wage Growth

Lower GDP growth and the shutdown will probably lead to higher unemployment and a reduction on the upward pressure for wage growth.

Prior to the Great 2008 Recession, wages were growing at about 3% per year. After the recession, where wage growth bottomed-out at 1.9%, and until early 2015, wage growth average about 2.25%. It then rose in the last years of the Obama presidency to around 2.75% annual growth, when it flattened out again. The very low unemployment in the Trump years finally started pushing wages up again in early January 2018. The last measurement was at 3.2%, a nice sustainable rate.

For the reasons just cited, that is unlikely to remain that high in the future.

Immigration

There are few certainties in life. Two commonly mentioned are death and taxes. There is a third economic certainty. If population plus productivity doesn't not grow, economic growth will fall. It is clear that Donald Trump's war on immigration, legal and illegal, will significantly lower the number of immigrants coming into America.

That works fine when the non-immigrant population produces enough babies to to replace those that leave the country or die PLUS a little bit more. Here is the thing, the native population growth fell below the replacement rate well over a decade ago.

The only way for the American economy to keep growing (given our productivity rate is, and has been flat) is to ensure enough immigrants enter the country make up for the shortage. Trump's policies will prevent that.

Only time will tell.

Do You Think The Economy Has Done As Well As Trump Claims?

See results

Do You Think the Economy Is Going to Continue to Do As Well As You Think It is Doing Now

See results

© 2019 Scott Belford

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)